Aug. 4 (Bloomberg) -- Asian stocks dropped for the first day in seven after Toyota Motor Corp. said quarterly profit fell and Advanced Semiconductor Engineering Inc., the world's largest packager of chips, reported its third consecutive loss.

Shares of companies that reported better-than-expected net income, including Rio Tinto, AU Optronics Corp. and Konica Minolta Holdings Inc., advanced.

``The only thing driving this market right now is earnings,'' said Tatsuro Yuzawa, who helps manage $1.9 billion in Tokyo at Credit Suisse Trust & Banking Co.'s investment arm. ``There is great appetite from investors to buy those that came out with positive surprises, but at the same time, they are also pretty aggressive in selling those that disappointed.''

The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 1,000 companies, lost 0.4 percent to 102.99 as of 1:38 p.m. in Tokyo, halting a six-day, 2.8 percent rally.

Japan's Nikkei 225 Stock Average slid 0.9 percent to 11,874.93 on concern Prime Minister Junichiro Koizumi will call a snap election that the ruling party may lose if his plan to sell the postal services doesn't get passed by the upper house.

Indexes around the region dropped, except in Australia, New Zealand, Taiwan, Singapore and Thailand.

Toyota

Toyota, the world's biggest carmaker by value, lost 1.9 percent to 4,200 yen. Profit fell 6.9 percent to 266.9 billion yen ($2.4 billion), its second consecutive quarterly decline, on increased spending on research and factory construction. Analysts in a Bloomberg survey expected 305 billion yen.

Honda Motor Co. last month raised its full-year earnings forecast, and Nissan Motor Co. reiterated its forecast for record full-year earnings.

``Toyota's results were pretty much in line with my expectations,'' said Yuzawa. ``The stock had been going up on hopes Toyota will do well, especially since other automakers came out with pretty solid earnings.''

Shares of Advanced Semiconductor fell 1.6 percent to NT$25. The Taiwan company yesterday reported a second-quarter net loss of NT$9.09 billion ($286 million), compared with a profit of NT$2.02 billion a year earlier. That was wider than the loss of NT$8 billion to NT$9 billion the company had expected.

`Still Happy'

Trend Micro Inc., Japan's biggest antivirus software maker, slumped 3.9 percent to 3,730 yen. The company yesterday said operating profit, or sales minus the cost of goods sold and administrative expenses, tumbled 13 percent. That prompted UBS AG to cut its rating on the stock to ``neutral 2'' from ``buy 2.''

Rio Tinto, the world's third-biggest mining company, climbed 2.1 percent to a record A$50.96. First-half profit jumped 34 percent to a record $2.2 billion, the company said after the market closed yesterday. Five analysts surveyed by Bloomberg had a median profit estimate of $1.99 billion.

Shares of BHP Billiton, the world's biggest mining company, rose 1.8 percent to A$19.88.

``I'm still happy to hold on to my Rio and BHP shares,'' said Jim Reid, a Sydney-based senior fund manager at AMP Capital Investors' $1.5 billion Value Plus Fund. ``The Chinese economy is still strong and growth in the U.S. continues, which all bodes well for commodities volumes and prices.''

Konica Minolta

AU Optronics, the world's third-largest maker of liquid- crystal displays for computers and televisions, rose 1.9 percent to NT$53.60 in Taiwan. Second-quarter net income was NT$470 million, beating the NT$400 million estimate by analysts in a Bloomberg survey.

Shares of Konica Minolta, a Japanese maker of office equipment and digital cameras, had their biggest jump in two years after the company reported a profit gain because of narrower losses at its photographic unit. Konica Minolta rose 6 percent to 1,056 yen.

The stock had surged as much as 9.9 percent, the biggest gain since Konica Corp. and Minolta Co. merged in August 2003. The stock had the biggest advance on the Morgan Stanley Capital International World Index in Asian hours today.

Konica Minolta said yesterday profit rose to 7.32 billion yen in the three months to June 30, from 7.25 billion yen a year earlier. Operating loss at the camera and photo-imaging business narrowed to 729 million yen from 1.96 billion yen last year.

Postal Reform

Mizuho Financial Group Inc., Japan's largest bank by assets, dropped 0.8 percent to 507,000 yen. Takeda Pharmaceutical Co., Japan's largest drugmaker, fell 1.4 percent to 5,590 yen.

Japan's upper house of parliament may postpone voting on Koizumi's plan to privatize the post office until Aug. 8, local newspapers including the Nihon Keizai reported today.

Investors are concerned that any delay in deciding the postal reform bill will hamper efforts by the government to boost growth in the world's second-largest economy.

Koizumi has called the Japan Post sale the nation's biggest reform in a century. Opponents say the sale would result in job losses and end services that private companies aren't willing to offer. The prime minister said at a July 7 press conference that he would take a rejection of the proposal as a vote of no confidence in his government.

``The biggest risk out there is the political risk and until that's sorted out, investors are going to be reluctant to keep buying,'' said Mitsushige Akino, who oversees $190 million at Ichiyoshi Investment Management in Tokyo.

To contact the reporters on this story: Chen Shiyin in Singapore at schen37@bloomberg.net.

Last Updated: August 4, 2005 00:39 EDT